Home equity
Names and abbreviations on this page
CFPB — Consumer Financial Protection Bureau. United States regulator for consumer financial products.
Housing terms & practical skills
What it means
Home equity is the property's current value minus the debts secured against it. It is an estimate that changes with property value and loan balances. Equity is different from cash available in a bank account.
Related skills
Estimate carefullyUse a reasonable value and current secured balances.
Separate accessRecognize that selling or borrowing can involve costs and conditions.
Consider uncertaintyTest what happens if the estimated value falls.
An everyday example
If a home is worth $250,000 and secured debts total $190,000, estimated equity is $60,000. Sale proceeds could be lower after transaction costs and other required payments.
What to check
Equity can fall as well as rise. An estimated valuation does not guarantee a selling price or access to a new loan.